Page 4535 - Week 12 - Thursday, 15 October 2009
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Under division 3.1.3 of the act, the Law Society may appoint an investigator to investigate the affairs of a law practice. This appointment may authorise the investigator to investigate a particular allegation or matter, or allow for the investigation of trust accounts on a general or regular basis. The main purposes of an investigation are to examine whether the law practice has complied with, or is complying with, the requirements of the act, and to detect and prevent fraud or embezzlement.
However, the standard entry and search provisions in part 6.3 of the act normally operate in legislation empowering public servants, or their agents, to enter premises and take certain action in relation to the affairs of a private business. The conduct of investigators in those circumstances is more easily directed and controlled, and the territory is generally liable for any compensation for loss or damage. The entry and search provisions in their “standard” form certainly do not seem appropriate to the circumstances of a non-government regulator overseeing the activities of its own members. Under the current provisions, once the regulator has authorised the entry of premises, it has no control over the conduct of the investigator, provided that the investigator complies with the act.
The current investigative powers in division 6.3.2 of the act may expose a licensing body to significant liability for compensation, and the lack of control of investigators therefore causes concern in two areas. Firstly, the regulator is unable to expressly and specifically direct the activities of investigators. They may not exercise appropriate care and skill, and may cause unnecessary damage or loss to legal practices. Secondly, whether or not an investigator complies with the act, or follows a licensing body’s instruction, a person may currently claim compensation for any loss or damage. Under the act, compensation is to be paid by the Law Society, or the Bar Association, depending on whether a solicitor or barrister is being investigated. As a result, there is potential for significant withdrawals from the society’s statutory interest account, which is used to assist the funding of a number of significant legal service initiatives, including Legal Aid ACT and community legal service.
This bill, therefore, will ensure that, while the entry and search provisions are retained as a useful regulatory tool, they are to be amended to be more appropriate for exercise by a non-government regulator. The amendments will ensure that a regulator is able to properly control the conduct of its investigators, and that the regulator’s funds are not unduly exposed to claims for compensation.
This bill adopts provisions based on those in the Queensland Legal Profession Act, which ensures that a private regulator can require its investigators to act strictly in accordance with its directions. While the Queensland act provides for a useful model of drafting, we note that it deals with the question of compensation slightly differently, in that it limits compensation to the law practice’s costs of compliance with the requirements of an investigator.
The Law Society, having initially raised this issue with me, has been extensively consulted on the proposed changes. The Bar Association has also been consulted. I am confident that this bill will protect the Law Society and Bar Association from exposure to a broad risk of claims for the compensation, of their own members, in
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